Seeing from the other perspective

Grey is the new black....

I believe that in the recent surrounding economic turmoil, one can no longer make judgment calls solely based on "black-and-white" quantitative facts. Grey issues such as human psychological patterns must also be considered.

In trying to solve the world's economic problems, I feel that the regulators may have neglected to consider the human and media aspects, and have instead been fixated on facts and figures. The decision makers may have "lost touch" with human and psychological factors.

For instance, what can the British government hope to achieve by printing and circulating more money? Create artificially higher inflation?
As long as the general public remain skeptical and highly pessimistic on the general outlook of their own economic situation and hold deep doubts on keeping their jobs, they will not spend.

It is human nature for people to retreat into their "safe harbor" and conserve cash during bad times. They will not spend even if they view future money as being worth less tomorrow than today's (i.e. negative real interest rate) as they believe fundamentally that $1 saved today will go a longer way in the event of job loss.

Hence the most imperative act for most governments is to create jobs. Once peopel feel secure, they will start spending again.